On Friday, GOL Linhas Aereas Inteligentes S.A. (GOL) announced that its global offering of 38,005,000 preferred shares Incorporatedluding preferred shares in the form of American Depositary Shares (“ADSs”), by the company and ASAS Investment Fund, the company’s controlling shareholder was priced on October 8, 2009.

The offering of preferred shares in Brazil has been registered with the Comissao de Valores Mobiliarios (CVM), the Brazilian securities commission. ASAS Investment Fund will invest the entire the proceeds (excluding proceeds from the sale of any preferred shares upon the exercise of the over-allotment option) received from the sale of preferred shares in common shares newly issued by the company.

ASAS Investment Fund has granted the international and Brazilian underwriters an option to purchase up to 5,182,500 additional preferred shares Incorporatedluding preferred shares in the form of ADSs.

The ADSs were offered to the public at a price of US$9.48 per ADS, and the preferred shares were offered to the public at a price of R$16.50 per preferred share. Upon pricing, the transaction was upsized by 10% from 34,550,000 preferred shares to 38,005,000 preferred shares.

The net proceeds of approximately US$346.6 million from the global offering and the concurrent subscription of common shares by ASAS Investment Fund will be used primarily for general corporate purposes and to strengthen its cash position and balance sheet.

Gol remains better positioned to capitalize on the growth of discount air travel in Brazil and the rest of Latin America given its strong market share and efficient operations. Favorable trends in fuel prices and exchange rates are also benefiting the company’s outlook.

Although competitive pressures and the impact of the global financial crisis are a source of concern, Gol’s position is strong. We expect the company to experience growth in the short-to-medium term given its continued investment in fleet renovation and international agreements.

Thus, we are maintaining our Outperform recommendation on Gol ADRs.

Zacks Investment Research
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